IRS Denying Open Source Projects Non-Profit Status

Apparently the IRS has taken the stance that Open Source projects, that are either created through the collaborations of individuals or corporations (which the government increasingly considers people) are not eligible for non-profit status. This news comes as the OpenStack foundation and Yorba foundation have both recently been denied by the IRS for non-profit status.

While it may be true that some open source projects may not necessarily be deserving of non-profit status, most of these projects are run by a community of people and/or companies that come together for a common cause. They also make most of their software free and open to the public which is almost the perfect definition of doing a public good. Not only that, but most open source foundations generally accept contributions from the public, individuals and corporations that are willing to cooperate for that specific cause.

When you consider how many private individuals donate their own money and time to non-profits as it is already it doesn’t necessarily seem outrageous to think that open source projects should be able to as well. In fact, considering how many open source projects currently drive the world as we know it, it would be a real shame if they were all forced to be for-profit even when it isn’t inherently in their business model.

Hopefully these open source projects will be able to find a way to convince the IRS to allow them to operate as non-profits because a lot of people donate money and time to these projects in order to keep them as open as possible. After all, charging for an open source project’s products just seems ridiculous and they can’t be called ‘donations’ if you actually have to pay for them because they’re now forced to be for-profit. It just seems utterly ridiculous and maybe the IRS needs to better understand how open source works in order to understand why they have to remain non-profit.